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Alan Price

Peninsula Business Services

Employment Law & HR Director

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Do I need to have a redundancy procedure in place?

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Making an employee redundant is a difficult situation to face and while it is not a legal requirement to have a redundancy procedure as part of employment documentation, employers often feel it provides clarity to employees in what can be a very difficult time.

Terminating employment because of a redundancy is still considered to be a dismissal, and a redundancy dismissal, even where the termination of employment is a forgone conclusion because an entire company is closing down, can result in an unfair dismissal finding at employment tribunal because the procedure adopted was faulty.

Specific procedures and timescales will differ depending on the number of redundancies proposed to take place within a set period of time but general principles remain the same.

At the heart of the procedure is consultation with affected staff.

This entails informing them of the situation and allowing them to put forward any ideas they may have about avoiding compulsory redundancy dismissals.

Step #1

Your starting point is to draft a business case for your redundancy showing why redundancies are being considered. It is important to include evidence of your current situation. Redundancies do not always come about because of a lack of work; a restructure within a thriving business where job roles are consolidated can still result in a fair redundancy situation.

An initial announcement should be made to all affected individuals that their roles are being put at risk of redundancy – remember it is the role that is being made redundant, not the person.

Step #2

Consultation should then begin and this must be meaningful i.e. you should consider seriously any alternative measures put forward by employees which will achieve the desired result whilst saving jobs.

Consultation at this stage is likely to be in group form. If there are a large number of employees involved, elections should be held to elect representatives who will then take part in consultation with you on behalf of the employees.

Step #3

If you need to select a certain number of employees to be made redundant, you will need to identify the selection criteria and mark all affected employees against that criteria.

Be careful which criteria you use – reliability and attitude could be too subjective to use as the only criteria. Instead, use something which is measureable such as sales figures, or performance against monthly targets.

Meet individually with those employees who have scored the lowest and therefore remain at risk of redundancy. Allow them to challenge their scores if necessary and then confirm exactly who is to be made redundant. Consider whether there are any suitable alternative roles for the redundant employees and if there are, allow a 4 week trial period in the new role.

Finally…

The last step is to calculate statutory redundancy pay for any employees with at least two years’ service.

This is calculated according to a statutory formula which considers the employee’s age; length of service and their weekly pay. The employee should receive a financial statement setting out what their redundancy pay will be.

Author Profile Picture
Alan Price

Employment Law & HR Director

Read more from Alan Price
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